How will the announcement of enhanced MSP for Kharif products help the markets?

The cabinet announced minimum support prices for 14 crops that are 50%-83% higher than the cost of cultivation in a clear effort to put more money in the hands of farmers. The MSP of paddy and Jowar had been increased by 50% each over the cost of cultivation to Rs.1868 and Rs.2620 respectively. Similarly, the MSP of Bajra has been hiked by 83% over the cost of cultivation to Rs.2150. In addition, the government in a bid to give solace to farmers has also extended an interest subvention scheme for farmers till 31 August. This subvention allows the farmers to get a 3% reduction in interest rates if they pay loans on time. This is likely to be a big relief for farmers. In addition, the good Kharif output due to favorable MSP will help expand food grain output and also keep inflation in check.